(Editor's note: The following commentary appears
as the "Free-Market Fundamentals" in the Summer 2010 issue of Impact.)

Economics dominates
public life and important policy discussions these days, but most people who
rely on what they've learned of it in the schools are entering the intellectual
battle unarmed.

Economics courses in
high school are few and far between and often deal with little more than "consumer"
issues: how to balance a checkbook, how to find the best deals in the market,
or how to borrow money at the lowest interest rate. Those are all useful things
to know, but the mental tools and essential principles needed to analyze and
evaluate the paramount issues of the day are too often missing.

Even a cursory
examination of textbooks used in high school economics courses reveals a dismal
level of understanding or outright bias by the text authors themselves.
Students are sometimes reading that citizens are under-taxed, that government
spending creates new wealth and that politicians are better long-term planners
than private entrepreneurs. It is not uncommon for texts to portray free-market
competition and private property in a suspicious light while presenting
government intervention with little or no critical scrutiny.

Economics is immensely
important. Without it we miss an understanding of much of what makes us the
unique, thinking creatures we are. Economics is the study of human action in a
world of limited resources and unlimited wants — a lively topic that cannot be
reduced to lifeless graphs and mind-numbing equations that occupy the
pretentious planner's time.

Economics teaches us
that everything of value has a cost. It informs us that higher standards of
living can only come about through greater production. It tells us that nations
become wealthy not by printing money or spending it, but through capital
accumulation and the creation of goods and services. It tells us that supply and
demand are harmonized by the signals we call prices and that political attempts
to manipulate them produce harmful consequences.

Economics explains that
good intentions are worse than worthless when they flout inexorable laws of
human action. It reminds us to think of the long-term effects of what we do,
not just the short-term or the flash-in-the-pan effects.

When people have little
or no economic understanding, they embrace impractical "pie-in-the-sky"
solutions to problems. They may think that whatever the government gives must
really be "free," and that all it has to do to foster prosperity is to command
it.

Citizens are being asked
every day to form judgments and cast votes for programs and proposals that are
largely economic in nature. We should think about how we can provide the
missing tools we need to make those and other such decisions, so that we don't
dig ourselves deeper in the muck of poor thinking and bad public policy. I'm
thankful that the Mackinac Center helps fill the void created by the dearth of
sound economics in primary and secondary education.

#####

Lawrence
W. Reed is president of the Foundation for Economic
Education and president emeritus of the Mackinac Center for Public Policy,
a research and educational institute headquartered in Midland, Mich. Permission
to reprint in whole or in part is hereby granted, provided that the author and
the Center are properly cited.